'..November inflation in the euro area surged to a record 4.9 percent, exceeding all forecasts for the measure .. The second point is that the level and the persistence of inflation globally has surprised just about everyone .. It’s been quite the year for inflation surprises.
As in the U.S., the level of interest rates suggested by rules-based guidelines has been mostly ignored by global central banks in the last few years. Almost universally, rates have been kept lower than the Taylor Rule had suggested..''U.S. inflation is currently 6.8%, the highest rate in the developed world. But inflation has risen above 5 percent in six countries (including Germany, Ireland, and Spain) and four other countries are now seeing price increases of between 4 and 5 percent (including Canada, New Zealand and the U.K.). November inflation in the euro area surged to a record 4.9 percent, exceeding all forecasts for the measure.
This broadening of global inflation is important. As Larry Summers has recently pointed out, the backdrop of global disinflation was a key argument Jerome Powell made earlier this year to support the idea that U.S. inflation would be transitory. Broadening global inflation also weakens the argument that inflation would be unique to the U.S. because of the way the Covid-related fiscal packages were designed (the size and structure of the packages) and also U.S.-focused supply chain issues. (The differences in the size and structure of pandemic responses globally probably do help explain why inflation rates in the U.S. are the highest among developed countries).
The second point is that the level and the persistence of inflation globally has surprised just about everyone .. It’s been quite the year for inflation surprises.
As in the U.S., the level of interest rates suggested by rules-based guidelines has been mostly ignored by global central banks in the last few years. Almost universally, rates have been kept lower than the Taylor Rule had suggested..'
- Bill Hester (
Source, December 11, 2021)
Context (Banking Reform - English/Dutch) '..a truly stable financial and monetary system for the twenty-first century..''Current policy and market structures ensure instability and persistent hardship.''..the consumer price index, up 6.8% for the 12 months ending in November, also the biggest surge .. in 39 years.'Russians Face Soaring Costs and Tough Choices This New Year, December 22, 2021